Siemens Hearing Instruments Ltd v Friends Life Ltd (2013)

Summary

A notice to operate a break clause in a lease was not expressed to be given under the Landlord and Tenant Act 1954 s.24(2) as required by the terms of the lease, but the notice was not invalidated by the failure to state that it was given under s.24(2).

Facts

The claimant tenant (S) claimed that a notice to exercise a break option in a lease was valid.

The lease was of business premises for a 25-year term. The lease provided S with a break option in cl.19. Subject to the satisfaction of certain pre-conditions S could determine the term on the termination date by giving the defendant landlord (F) not more than 12 months' and not less than six months' written notice "which notice must be expressed to be given under section 24(2) of the Landlord and Tenant Act 1954". Within the notice period S served a notice to determine the lease but without referring to the Landlord and Tenant Act 1954 s.24(2). F said that the notice was not a valid notice. It was agreed that the requirement for a reference to s.24(2) had been inserted into the lease so as to avoid the perceived risk that otherwise the tenant could determine the tenancy and simultaneously request a new tenancy under the Act, in the expectation of better terms. It had been held in Garston v Scottish Widows Fund & Life Assurance Society [1996] 1 W.L.R. 834 that a tenant could not simultaneously exercise a break clause and request a new tenancy.

S submitted that (1) the requirement for a notice under s.24(2) was meaningless as there was no such thing, and therefore all that was required on the proper construction of cl.19 was a notice such as the one that had been given; (2) if cl.19 did require the notice to refer to s.24(2), it did provide that a non-compliant notice was invalid.

Held

(1) The words of cl.19 requiring a notice to state that it was given under s.24(2) could not be disregarded, even if there was no such thing as a notice under s.24(2). There was no difficulty about giving a compliant notice. The notice did not comply with cl.19 (see paras 17-21 of judgment). (2) The principles related to the validity of non-compliant notices applied equally to statutory and contractual notices, Newbold v Coal Authority [2013] EWCA Civ 584, [2013] R.V.R. 247, York v Casey (1999) 31 H.L.R. 209 and Yates Building Co Ltd v RJ Pulleyn & Sons (York) Ltd (1975) 237 E.G. 183 followed. The lease did not provide that a non-compliant notice would be invalid or ineffective. Since it did not, it was natural to conclude that it was intended that the notice should, at least in some circumstances, but not necessarily in all, survive non-compliance. The use of the word "must" was not decisive, Petch v Gurney (Inspector of Taxes) [1994] 3 All E.R. 731 applied and Yates considered. The court would look to the substance, not the form. What was often decisive was the effect of the non-compliance, R. v Soneji (Kamlesh Kumar) [2005] UKHL 49, [2006] 1 A.C. 340 considered. Although provisions relating to the exercise of an option were usually mandatory, any such rule was not inflexible. In the instant case, whilst non-fulfilment of the pre-conditions would be fatal to the exercise of the break option, the notice was explicitly required to be timely but not explicitly required to be in due form in order to be effective. It followed that the notice was not invalidated by the failure to state that it was given under s.24(2) (paras 39-40).